Calling for a Kinder Capitalism

In a 2009 poll conducted by the BBC, only one out of every four Americans thought that capitalism in its current form was working well. Then came Occupy Wall Street (OWS), a physical manifestation of the anger of millions of Americans at an economic system in which big banks are bailed out by taxpayers only to turn around and pay billions in bonuses while filing record home foreclosures. Between the second quarter of 2009 and the fourth quarter of 2010, our nation's total income rose by $528 billion, but of that economic growth, 88 percent went to corporate profits and just 1 percent—that's right, 1 percent—went to workers. A popular sense of injustice appeared to be America’s leading growth industry as we embarked on the 21st century.

But just as pressure builds between tectonic plates and eventually leads to massive earthquakes, so too can the slow grind of protests eventually change the political landscape.

In 2011, grassroots economic-justice organizations mobilized protests at six corporate shareholder meetings. This year, there have already been 20, including the stunning disruption of Bank of America’s shareholder meeting last week to protest foreclosure abuses and funding for mountaintop removal mining, and another 20 protests are scheduled in the coming weeks. That alone says something about the rising scale of public anger at the abuses of crony capitalism, but such anger—even when it takes to the streets—doesn't always lead directly to concrete policy change.

Yet last month, Citigroup shareholders rejected a lavish $15 million exit pay package for the company’s chief executive, Vikram S. Pandit. Shareholder activism is nothing new, but this was the first time on record that shareholders at a major bank successfully blocked a CEO pay package. Taken as a whole, this suggests that protesters aren't just lone wolfs tilting at windmills but, rather, represent the moral mainstream of America, agitating for and starting to achieve changes in an economic system that no longer works for working people. According to The New York Times, Mike Mayo, an analyst with Credit Agricole Securities, said: “This is a milestone for corporate America. When shareholders speak up about issues on which they’ve been complacent, it’s definitely a wake-up call. The only question is what took so long?”

One might wonder the same thing about Europe. With employment levels suffering under extreme austerity measures crippling the economic growth prospects of the continent, people have been protesting in the streets for months. But then, like the Citi shareholder vote, something concrete happened—voters in France resoundingly rejected conservative austerity governance and elected a socialist president.

Mind you, I'm not suggesting—nor are most Occupy protesters suggesting—that we get rid of capitalism in favor of, say, socialism. Even the “socialist” French president-elect François Hollande doesn’t want state control of industry, but merely to preserve social welfare programs and further pro-growth economic policies. Calling Hollande a socialist is like calling Obama a gay-rights activist, but in our increasingly right-leaning political climate, it’s all relative.

What economic-justice advocates are shaping is a kinder, gentler capitalism, one in which the super rich pay at least the same tax rate as working people, workers enjoy living wage laws and good benefits and can rely on a cradle-to-grave safety net if they fall on hard times, and ladders for opportunity for all. The rest is still taking shape: re-structuring corporate charters so business is beholden to workers and long-term growth—not just short-term profits for stockholders—new models of ownership so employees have a stake in their labor, watchdog laws that put the public interest ahead of profiteering. Fortunately, we have much to build on here, from worker-owned cooperative factories in Argentina to the Glass-Steagall Act in the United States that kept bank abuses at bay (ahem, I'm looking at you, JPMorgan Chase) and yes, there are even some things we can learn from Europe. Groups like the New Bottom Line coalition and Occupy have working groups that are studying alternative models, but one can also go to almost any city or town in America to find real creative small business models and public sector innovations that have already borne fruit.

Change takes time and even if pressure is building, it doesn’t appear that we’re headed for an earthquake anytime soon. But six years ago, if JPMorgan had lost $2 billion on a reckless proprietary gamble on excess customer deposits, most Americans would have shrugged their shoulders in resignation and chocked it up to “capitalists being capitalists.” But today, even Mitt Romney backtracked to call for “sensible financial regulation.” Threatened by the massive inequality it intentionally perpetuated, capitalism as we have known it is increasingly politically threadbare and, as JPMorgan has shown, less and less economically sustainable. This coming spring, there will be more protests. But in addition to slogans on protest placards, look for more and more actual signs of change to pop up like daisies through the cracks of crony capitalism, new tools for holding the markets accountable and new models for making the economy work for the 99 percent. When the Occupy movement talks about 99 Spring, perhaps they’re not just planting seeds. Change is sprouting.

Last year, the Americans for Tax reform head said that letting the Bush tax cuts expire wasn't the same as a tax increase. Republicans in Congress should use this to their advantage in the fiscal cliff fight.

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